Trump has floated 25 percent tariffs on imports from Mexico and Canada, as well as expanded tariffs on Chinese imports. When it comes to drugs, health care industry insiders say Trump’s tariff plan could not only raise prices but also lead to shortages in the U.S.
Canada, China and Mexico are among the top five countries from which the U.S. imports pharmaceutical goods, with China accounting for nearly a quarter of all such imports as of 2021.
Health care industry insiders are hoping the incoming administration will instead enact nuanced, targeted tariffs.
What they’re saying:
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“While China accounts for a growing portion of U.S. pharmaceutical imports, particularly [active pharmaceutical ingredients (API)] used in generic drugs, we believe the Trump administration is unlikely to impose hefty tariffs on these imports to avoid increasing U.S. drug costs,” said Arthur Wong, health care managing director at S&P Global Ratings.
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“80 percent of the API is produced overseas. A lot of the components for devices are as well, including packaging, enclosures, delivery systems, etc. There will be an impact, especially for those products,” said Mark Hendrickson, director of supply chain policy at the health care improvement company Premier Inc.
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Dan Izhaky, president of the American Medical Manufacturers Association, said the cost of medical equipment will “absolutely” go up in the short term if tariffs are implemented.
Jumpstarting domestic production of both medical equipment and drugs is no small order. Izhaky estimates it would take between 18 to 24 months to start manufacturing medical equipment, in ideal conditions. For manufacturing drugs, Hendrickson conservatively puts the timeline between three years and five years.
And if tariffs don’t disrupt medical supply chains, as Wong warns they could, experts are skeptical that they’ll help.
“If tariffs are put in place on health care products, as it stands, none of that money is going to help with any of those things that we think are very valuable,” Hendrickson said.
